Freedom Financial Holdings Announces Earnings for Third Quarter of 2023

Rhea-AI Summary

Freedom Financial Holdings announces net income of $1.3 million for Q3 2023

Positive

• Freedom Financial Holdings reported net income of $1.3 million for the third quarter of 2023, compared to $1.8 million in the previous quarter and $2.7 million in the same period last year. The company experienced growth in loans and deposits, with a 17.2% increase in loans and a 10.2% increase in deposits. However, the net interest margin decreased by 17 basis points due to higher deposit costs. Non-interest income also decreased by 26.6% compared to the previous quarter.

Negative

• The net interest margin decreased by 17 basis points and non-interest income decreased by 26.6% compared to the previous quarter.

FAIRFAX, Va., Oct. 27, 2023 /PRNewswire/ -- Freedom Financial Holdings (OTCQX: FDVA), (the "Company" or "Freedom"), the holding company for The Freedom Bank of Virginia (the "Bank") today announced net income of $1,318,378, or $0.18 per diluted share, for the three months ended September 30, 2023. This compares to net income of $1,770,075  or $0.24 per diluted share, for the linked quarter and net income of $2,689,950 or $0.37 per diluted share for the three months ended  September 30, 2022. Net income for the nine months ended September 30, 2023, was $4,325,088 or $0.60 per diluted share, compared to $7,701,633 or $1.05 per diluted share for the nine months, ended September 30, 2022.  

Joseph J. Thomas, President, and CEO, commented, "In this challenging economic environment, our team remains focused on serving existing clients and growing new lead client relationships.  Freedom Bank enjoyed 17.2% annualized growth in loans and 10.2% annualized growth in deposits during the third quarter compared to the linked quarter.  Our low loan-to-deposit ratio of 80.8% and our strong Tier 1 Capital Ratio of 13.5% on September 30, 2023, enable us to remain proactive in the market.  As expected, this client-centered approach and conservative balance sheet posture has resulted in a reduced net interest margin, lower by 17 basis points as compared to the linked quarter, due to an elevated cost of deposits, higher by 31 basis points, in this environment of rapidly rising interest rates.  Also, our fee income is lower by 26.6% compared to the linked quarter as a result of our decision to hold more of the higher yielding SBA and jumbo residential mortgage loans on balance sheet to grow interest income for future periods.  We are encouraged by the recent trends that suggest margin decline and mix changes have slowed and our loan and investment yields are accelerating.  We expect that our focus on clients and conservative financial philosophy will position us for future opportunities." 

Third Quarter 2023 Highlights include:

• Net income for the third quarter was $1,318,378 or $0.18 per diluted share compared to net income of $1,770,075 or $0.24 per diluted share in the linked quarter and net income of $2,689,950 or $0.37 per diluted share for the three months ending September 30, 2022.
• Return on Average Assets ("ROAA") was 0.49% for the quarter ended September 30, 2023, compared to 0.69% for the linked quarter and 1.15% for the three months ended September 30, 2022.
• Return on Average Equity ("ROAE") was 6.75% for the three months ended September 30, 2023, compared to 9.15% for the linked quarter and 13.81% for the three months ended September 30, 2022.
• Total Assets were $1.06 billion on September 30, 2023, an increase of $73.91 million or 7.50% from total assets on December 31, 2022.
• Loans held-for-investment (excluding PPP loans) increased by $31.20 million or by 4.31% during the quarter.
• Uninsured deposits were 28.10% of total deposits and total available secured liquidity was 120.27% of uninsured deposits on September 30, 2023.
• The tangible common equity ratio (adjusted for unrealized losses on held-to-maturity securities) was at 7.14% at the end of the quarter.
• Total deposits increased by $23.16 million or by 2.56% in the third quarter. Non-interest-bearing demand deposits increased by $2.56 million from the linked quarter to $168.10 million and represented 18.15% of total deposits on September 30, 2023.
• The net interest margin² decreased in the third quarter to 2.59%, lower by 17 basis points compared to the linked quarter and lower by 112 basis points compared to the same period in 2022. The decrease in the net interest margin across linked and calendar quarters was primarily due to an increase in funding costs.
• The cost of funds was 3.36% for the third quarter, higher by 31 basis points compared to the linked quarter and higher by 244 basis points compared to the same period in 2022, as deposit costs increased, partially offset by income from balance sheet hedges.
• Non-interest income decreased by 26.60% compared to the linked quarter and decreased by 28.16% compared to the same period in 2022. The decrease in non-interest income in the third quarter of 2023 compared to the linked quarter and calendar quarter was primarily due to lower gain-on-sale revenue from mortgage and SBA loans, as continued market volatility and higher yields, have led to the Company electing to retain more mortgage and SBA loans on the balance sheet in 2023.
• Non-interest expense in the third quarter increased by 4.11% compared to the linked quarter and increased by 1.10% compared to the same period in 2022. The increase in non-interest expense for linked quarters, was primarily due to a combination of higher occupancy, equipment, and insurance costs, partially offset by lower compensation expenses and settlement costs. The increase in non-interest expense compared to the calendar quarter was primarily due to higher equipment, insurance and data processing costs, partially offset by lower compensation and occupancy expenses.
• The Efficiency Ratio³ was 76.43% for the quarter ended September 30, 2023, compared to 69.02% for the linked quarter and 59.19% for the same period in 2022.
• Net charge offs declined in the third quarter and were 0.03% of average loans. The ratio of non-accrual loans to loans held-for-investment was 0.92% on September 30, 2023, compared to 1.23% on December 31, 2022. The ratio of non-performing assets to total assets was 0.66% on September 30, 2023, compared to 0.88% on December 31, 2022.
• The Company recognized a $205,000 provision for loan losses during the third quarter and the ratio of the allowance for credit losses to loans held-for-investment was 0.95% compared to 0.98% in the linked quarter.
• The Company continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.64%, Common Equity Tier 1 ratio of 13.26%, Tier 1 Risk Based Capital ratio of 13.26% and a Total Capital ratio of 14.10%.

Net Interest Income

The Company recorded net interest income of $6.53 million for the third quarter of 2023, lower by 2.56% compared to the linked quarter, and lower by 20.82% compared to the same period in 2022. The net interest margin in the third quarter of 2023 was 2.59%, lower by 17 basis points compared to the linked quarter and lower by 112 basis points compared to the same period in 2022.

The following factors contributed to the changes in net interest margin during the third quarter of 2023 compared to the linked and calendar quarters:

• Yields on average earning assets increased to 5.83% compared to 5.68% in the linked quarter and 4.58% in the calendar quarter. Higher yields on investment securities and loans drove the increase in yields on earning assets.
• Loan yields increased by 20 basis points to 6.20% from 6.00% in the linked quarter, while yields on investment securities increased by 10 basis points to 4.81% from 4.71% in the linked quarter. Loan yields increased by 106 basis points, while yields on investment securities increased by 152 basis points compared to the calendar quarter. Repricing of loans and securities in the higher rate environment was the primary reason for higher yields on these asset categories.
• Cost of funds increased by 31 basis points to 3.36% from 3.05% in the linked quarter, and by 244 basis points compared to the calendar quarter, primarily due to rising rates on interest checking, money market and time deposit accounts and a decrease in non-interest-bearing deposits. The increase in deposit expense was partially offset by interest income from balance sheet hedges, in the form of interest rate swaps, whereby the bank pays a fixed rate and receives the Federal Funds effective rate for the duration of the swaps. On September 13, 2023, the Company executed an interest rate swap with a notional amount of $30 million, to reduce the interest rate risk associated with fixed rate residential loans on the balance sheet, whereby the Company would pay a rate of 4.46% over the term of the swap and receive the effective Fed Funds rate over the same period. The notional amount of the interest rate swaps was $80 million with a weighted average remaining term of 3.26 years, as of September 30, 2023.

Non-interest Income

Non-interest income was $816,250 for the third quarter, a decrease of 26.60% when compared to the linked quarter and a decrease of 28.16% when compared to the same period in 2022. The decrease in non-interest income in the third quarter of 2023 compared to the linked quarter and calendar quarter was primarily due to lower gain-on-sale revenue from mortgage and SBA loans, as continued market volatility and higher yields, have led to the Company electing to retain more mortgage and SBA loans on the balance sheet in 2023.

Total Revenue⁵

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was lower by 5.98% compared to the linked quarter and lower by 21.71% compared to the calendar quarter in 2022, due to a combination of lower net interest income, resulting from net interest margin compression, as well as a decline in non-interest income stemming from a combination of reduced mortgage and SBA loan activity and the Company electing to hold more mortgage and SBA loans on its balance sheet in 2023.

Non-interest Expenses

Non-interest expense in the third quarter increased by 4.11% compared to the linked quarter and increased by 1.10% compared to the same period in 2022. The increase in non-interest expense for linked quarters, was primarily due to a combination of higher occupancy, equipment, and insurance costs, partially offset by lower compensation expenses and settlement costs. The increase in non-interest expense compared to the calendar quarter was primarily due to higher equipment, insurance and data processing costs, partially offset by lower compensation and occupancy expenses.

The Efficiency Ratio was 76.43% for the quarter ended September 30, 2023, compared to 69.02% for the linked quarter and 59.19% for the same period in 2022.

Asset Quality

Non-accrual loans were relatively unchanged in the third quarter at $6,947,841 or 0.92% of loans held-for-investment compared to $6,776,013 or 0.93% of loans held-for-investment at the end of the linked quarter. As of September 30, 2023, there were no loans that were 90 days or more past due and accruing.  There was no Other Real Estate Owned ("OREO") on the balance sheet as of September 30, 2023. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, and OREO assets) were $6,947,841 or 0.66% of total assets as of September 30, 2023, compared to $6,776,013 or 0.65% of total assets, at the end of the linked quarter.

Following an assessment of the collectability of the loans held-for-investment at the end of the second quarter, it was determined that a $205,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Company booked a provision of $238,000 in the second quarter of 2023.

The Company's ratio of Allowance for Credit Losses to loans held-for-investment was 0.95%  as of September 30, 2023, compared to the ratio of Allowance for Loan and Lease Losses to loans held-for-investment of 1.09% as of December 31, 2022.

Total Assets

Total assets as of September 30, 2023, were $1.06 billion compared to  $1.04 billion on June 30, 2023, and total assets of $985.06 million on December 31, 2022.  Changes in major asset categories since December 31, 2022, were as follows:

• Interest bearing deposits at banks decreased by $19.79 million on funding of strong loan growth.
• Available for sale investment balances increased by $24.48 million.
• Other loans held-for investment grew by $61.69 million

Total Liabilities

Total liabilities as of September 30, 2023, were $983.40 million compared to total liabilities of $963.90 million on June 30, 2023, and $910.12 million on December 31, 2022. Total deposits were  $926.36 million on September 30, 2023, compared to $903.20 million on June 30, 2023, and total deposits of $848.90 million as of December 31, 2022. Non-interest-bearing demand deposits increased by $2.56 million during the third quarter and comprised 18.15% of total deposits at the end of the third quarter. Other interest-bearing demand deposits decreased by $7.76 million, savings deposits decreased by $1.60 million and time deposits increased by $29.96 million during the quarter.

Stockholders' Equity and Capital

Stockholders' equity as of September 30, 2023 was $75.57 million compared to $77.40 million on June 30, 2023, and $74.95 million as of December 31, 2022. The decrease was due to Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative position. AOCI declined during the third quarter of 2023 due to increased unrealized losses related to available-for-sale securities. The tangible book value of the Company's common stock on September 30, 2023, was $10.36 per share compared to $10.43 per share on December 31, 2022. Excluding AOCI losses/gains, the tangible book value of the Company's common stock on September 30, 2023, was $13.32 per share compared to $12.87 per share on December 31, 2022.

As of September 30, 2023, the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized bank holding companies. The Bank's capital ratios as of September 30, 2023, and December 31, 2022, were as follows:

	September 30, 2023	December 31, 2022
Total Capital Ratio	14.10 %	14.28 %
Tier 1 Capital Ratio	13.26 %	13.37 %
Common Equity Tier 1 Capital Ratio	13.26 %	13.37 %
Leverage Ratio	10.64 %	11.32 %

About Freedom Financial Holdings, Inc.

Freedom Financial Holdings, Inc. is the holding company of The Freedom Bank of Virginia, a community bank with locations in Fairfax, Reston, Chantilly, Vienna, and Manassas, Virginia. The Freedom Bank of Virginia also has an SBA division headquartered in Harrison, NY. For information about deposits, loans and other services, visit the website at www.freedom.bank.

Forward Looking Statements

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates, and expectations include: fluctuation in market rates of interest and loan and deposit pricing; general economic and financial market conditions, in the United States generally and particularly in the markets in which the Company operates and in which its loans are concentrated, including the effects of declines in real estate values, increases in unemployment levels, inflation, recessions and slowdowns in economic growth, including as a result of COVID-19 and the impact of geopolitical conflicts, such as the war between Russia and Ukraine;  adverse developments in the financial services industry such as the recent bank failures; maintenance and development of well-established and valued client relationships and referral source relationships; the adequacy or inadequacy of our allowance for loan and lease losses; acquisition or loss of key production personnel; and the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, wars, terrorist acts or public health events, and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth. The Company cautions readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and the Company may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.  Some of the financial tables in this document reflect classifications to accounts to improve consistency in financial reporting.

	FREEDOM FINANCIAL HOLDINGS
	CONSOLIDATED BALANCE SHEETS
	(Unaudited)		(Unaudited)		(Audited)
	September 30,		June 30,		December 31,
	2023		2023		2022
ASSETS
Cash and Due from Banks	$                                 1,916,716		$                                 3,708,015		$                                      2,099,062
Interest Bearing Deposits with Banks	12,880,986		29,896,249		32,674,953
Securities Available-for-Sale	206,038,021		196,348,060		181,558,037
Securities Held-to-Maturity	20,598,991		20,819,794		17,096,010
Restricted Stock Investments	4,057,450		3,750,400		3,889,200
Loans Held for Sale	3,487,878		6,917,461		5,064,385
PPP Loans Held for Investment	278,090		1,916,844		5,829,662
Other Loans Held for Investment	755,863,604		724,666,359		694,173,347
Allowance for Credit Losses	(7,214,359)		(7,107,804)		(7,614,120)
Net Loans	748,927,335		719,475,399		692,388,889
Bank Premises and Equipment, net	910,365		945,786		989,072
Accrued Interest Receivable	3,699,397		3,523,829		3,784,076
Deferred Tax Asset	8,750,083		7,496,829		1,982,776
Bank-Owned Life Insurance	26,539,551		26,350,770		26,248,974
Right of Use Asset, net	2,097,713		2,207,805		1,736,285
Other Assets	19,068,451		19,857,624		15,551,415
Total Assets	$       1,058,972,938		$       1,041,298,020		$               985,063,133
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand Deposits
Non-interest Bearing	$                 168,104,722		$                 165,540,044		$                       187,416,628
Interest Bearing	499,194,764		506,957,179		409,760,573
Savings Deposits	4,060,321		5,664,940		5,977,828
Time Deposits	255,000,491		225,037,517		245,840,048
Total Deposits	926,360,299		903,199,680		848,995,078
Federal Home Loan Bank Advances	20,000,000		20,000,000		25,000,000
Other Borrowings	278,090		2,834,173		5,826,298
Subordinated Debt (Net of Issuance Costs)	19,753,237		19,733,756		19,674,794
Accrued Interest Payable	2,291,470		1,935,957		1,265,796
Lease Liability	2,036,523		2,128,300		1,862,773
Other Liabilities	12,680,286		14,067,030		7,492,264
Total Liabilities	$          983,399,904		$          963,898,897		$               910,117,002
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized:
0 Shares Issued and Outstanding, September 30, June 30 and December 31, 2022
Common Stock, $0.01 Par Value, 25,000,000 Shares:
23,000,000 Shares Voting and 2,000,000 Shares Non-voting.
Voting Common Stock:
6,619,677, 6,623,845, and 6,583,328 Shares Issued and Outstanding
at September 30 2023, June 30, 2023, and December 31, 2022 respectively
(Includes 94,343, 99,011, and 72,069 Unvested Shares on September 30, 2023, June 30, 2023, and
December 31, 2022 respectively)	65,253		65,248		65,160
Non-Voting Common Stock:
673,000, 673,000, 673,000 Shares Issued and Outstanding at September 30, 2023, June 30, 2023, and
December 31, 2022 respectively)	6,730		6,730		6,730
Additional Paid-in Capital	58,541,534		58,369,052		58,241,451
Accumulated Other Comprehensive Income, Net	(21,597,860)		(18,280,904)		(17,480,993)
Retained Earnings	38,557,376		37,238,997		34,113,783
Total Stockholders' Equity	75,573,033		77,399,123		74,946,131
Total Liabilities and Stockholders' Equity	$       1,058,972,938		$       1,041,298,020		$               985,063,133

 

 

		FREEDOM FINANCIAL HOLDINGS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		For the three		For the three		For the nine		For the nine
		months ended		months ended		months ended		months ended
		September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest Income
Interest and Fees on Loans		$               11,513,273		$                 8,408,971		$               32,353,378		$                   22,710,581
Interest on Investment Securities		2,730,411		1,626,322		7,418,816		4,050,458
Interest on Deposits with Other Banks		471,031		171,644		1,236,258		261,790
Total Interest Income		14,714,715		10,206,937		41,008,452		27,022,829
Interest Expense
Interest on Deposits		7,829,199		1,647,182		19,496,776		2,827,212
Interest on Borrowings		359,191		317,128		1,089,153		725,176
Total Interest Expense		8,188,390		1,964,310		20,585,929		3,552,388
Net Interest Income		6,526,324		8,242,627		20,422,523		23,470,441
Provision for Loan Losses		(205,000)		(382,000)		(986,000)		(921,000)
Net Interest Income After
Provision for Loan Losses		6,321,324		7,860,627		19,436,523		22,549,441
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue		470,800		710,149		1,619,007		2,734,287
SBA Gain-on-Sale Revenue		-		63,727		-		593,557
Service Charges and Other Income		99,563		52,755		348,579		530,135
Gain on Sale of Securities		-		10,600		-		10,469
Servicing Income		57,106		54,792		187,210		164,858
Swap Fee Income		-		68,404		-		68,404
Increase in Cash Surrender Value of Bank-
owned Life Insurance		188,781		175,815		715,155		510,122
Total Non-interest Income		816,250		1,136,242		2,869,950		4,611,832
Non-Interest Expenses
Officer and Employee Compensation
and Benefits		3,410,564		3,655,913		11,029,253		11,665,177
Occupancy Expense		188,413		311,070		554,820		947,589
Equipment and Depreciation Expense		213,363		170,070		543,759		525,492
Insurance Expense		276,713		76,563		568,335		222,173
Professional Fees		365,316		251,597		1,040,801		823,573
Data and Item Processing		355,733		299,501		999,639		907,465
Advertising		105,183		104,119		357,569		324,454
Franchise Taxes and State Assessment Fees		304,432		282,912		877,221		707,648
Mortgage Fees and Settlements		83,250		97,495		283,869		332,554
Other Operating Expense		309,231		301,977		1,159,120		949,961
Total Non-interest Expenses		5,612,199		5,551,217		17,414,387		17,406,086
Income Before Income Taxes		1,525,376		3,445,652		4,892,086		9,755,187
Income Tax Expense/(Benefit)		206,998		755,702		566,998		2,053,554
Net Income		$                     1,318,378		$                     2,689,950		$                     4,325,088		$                     7,701,633
Earnings per Common Share - Basic		$                               0.18		$                               0.37		$                               0.60		$                               1.05
Earnings per Common Share - Diluted		$                               0.18		$                               0.37		$                               0.59		$                               1.05
Weighted-Average Common Shares
Outstanding - Basic		7,277,022		7,271,784		7,250,615		7,308,866
Weighted-Average Common Shares
Outstanding - Diluted		7,293,482		7,285,786		7,287,642		7,333,499

 

 

	FREEDOM FINANCIAL HOLDINGS
	CONSOLIDATED STATEMENTS OF OPERATIONS
	(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
	For the three		For the three		For the three			For the three		For the three
	months ended		months ended		months ended			months ended		months ended
	September 30, 2023		June 30, 2023		March 31, 2023			December 31, 2022		September 30, 2022
Interest Income
Interest and Fees on Loans	$                11,513,273		$                10,857,368		$                  9,982,737			$                  9,503,228		$                      8,408,971
Interest on Investment Securities	2,730,411		2,522,682		2,165,723			2,061,298		1,626,322
Interest on Deposits with Other Banks	471,031		464,321		300,906			339,592		171,644
Total Interest Income	14,714,715		13,844,371		12,449,366			11,904,118		10,206,937
Interest Expense
Interest on Deposits	7,829,199		6,796,570		4,871,008			3,685,412		1,647,182
Interest on Borrowings	359,191		350,096		379,866			101,216		317,128
Total Interest Expense	8,188,390		7,146,666		5,250,874			3,786,628		1,964,310
Net Interest Income	6,526,324		6,697,705		7,198,492			8,117,490		8,242,627
Provision for Loan Losses	(205,000)		(238,000)		(543,000)			(327,000)		(382,000)
Net Interest Income after
Provision for Loan Losses	6,321,324		6,459,705		6,655,492			7,790,490		7,860,627
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue	470,800		769,649		378,558			357,654		710,149
SBA Gain-on-Sale Revenue	-		-		-			404,409		63,727
Service Charges and Other Income	99,563		94,428		154,588			92,235		52,755
Gains on Sale of Securities	-		-		-			20,503		10,600
Servicing Income	57,106		64,688		65,415			53,332		54,792
Swap Fee Income	-		-		-			-		68,404
Increase in Cash Surrender Value of Bank-
owned Life Insurance	188,781		183,235		343,140			158,972		175,815
Total Non-interest Income	816,250		1,112,000		941,701			1,087,106		1,136,243
Total Revenue5	$                      7,342,574		$                      7,809,705		$                      8,140,192			$                      9,204,596		$                      9,378,870
Non-Interest Expenses
Officer and Employee Compensation
and Benefits	3,410,564		3,469,477		4,149,212			3,495,260		3,655,913
Occupancy Expense	188,413		38,488		327,919			318,462		311,070
Equipment and Depreciation Expense	213,363		148,901		181,495			179,679		170,070
Insurance Expense	276,713		136,555		155,068			140,926		76,563
Professional Fees	365,316		325,405		350,080			238,732		251,597
Data and Item Processing	355,733		323,906		320,000			304,767		299,501
Advertising	105,183		133,907		118,479			124,450		104,119
Franchise Taxes and State Assessment Fees	304,432		290,049		282,739			282,796		282,912
Mortgage Fees and Settlements	83,250		141,333		59,286			23,156		97,495
Other Operating Expense	309,231		382,577		467,311			271,396		301,977
Total Non-interest Expenses	5,612,199		5,390,599		6,411,589			5,379,623		5,551,217
Income before Income Taxes	1,525,376		2,181,106		1,185,604			3,497,972		3,445,652
Income Tax Expense	206,998		411,031		(51,031)			636,033		755,702
Net Income	$                      1,318,378		$                      1,770,075		$                      1,236,635			$                      2,861,939		$                      2,689,950
Earnings per Common Share - Basic	$                                0.18		$                                0.24		$                                0.17			$                                0.40		$                                0.37
Earnings per Common Share - Diluted	$                                0.18		$                                0.24		$                                0.17			$                                0.39		$                                0.37
Weighted-Average Common Shares
Outstanding - Basic	7,277,022		7,307,802		7,280,803			7,238,807		7,271,784
Weighted-Average Common Shares
Outstanding - Diluted	7,293,482		7,317,113		7,317,805			7,252,669		7,285,786

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
		Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
		September 30, 2023						June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022
		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield
Assets
Cash		$                                     38,989,836		$          471,031		4.79 %		$                                     36,370,275		$          464,321		5.12 %		$                                     31,062,495		$          300,906		3.93 %		$                                     35,596,385		$          339,592		3.78 %		$                                     37,133,361		$          171,644		1.83 %
Investments (Tax Exempt)		20,763,539		197,591				21,202,088		187,739				21,182,371		182,470				20,664,285		184,800				21,615,440		186,314
Investments (Taxable)		208,005,473		2,574,314				197,080,849		2,374,368				184,686,055		2,021,572				182,096,499		1,915,306				179,086,818		1,479,134
Total Investments		228,769,012		2,771,905		4.81 %		218,282,937		2,562,107		4.71 %		205,868,426		2,204,042		4.34 %		202,760,784		2,100,106		4.11 %		200,702,258		1,665,447		3.29 %
Total Loans		736,781,506		11,513,273		6.20 %		726,201,568		10,857,368		6.00 %		703,610,368		9,982,737		5.75 %		689,158,712		9,503,228		5.47 %		648,964,205		8,408,971		5.14 %
Earning Assets		1,004,540,354		14,756,209		5.83 %		980,854,780		13,883,796		5.68 %		940,541,289		12,487,685		5.38 %		927,515,881		11,942,926		5.11 %		886,799,824		10,246,063		4.58 %
Assets		$                                1,062,975,635						$                                1,035,350,077						$                                   988,804,262						$                                   969,662,029						$                                   929,265,436
Liabilities
Interest Checking		$                                   213,956,322		$       2,130,491		3.95 %		$                                   197,224,144		$       1,892,301		3.85 %		$                                   154,625,978		$       1,320,093		3.46 %		$                                   130,004,364		$          862,014		2.63 %		$                                   132,342,702		$          458,605		1.37 %
Money Market		289,350,365		3,130,570		4.29 %		282,452,498		2,308,846		3.28 %		261,801,221		2,036,801		3.16 %		240,285,109		1,383,701		2.28 %		216,851,258		581,082		1.06 %
Savings		4,344,566		1,310		0.12 %		5,678,056		1,586		0.11 %		6,935,212		2,326		0.14 %		6,108,935		3,067		0.20 %		6,659,935		2,119		0.13 %
Time Deposits		248,550,686		2,566,827		4.10 %		239,305,940		2,593,837		4.35 %		248,679,942		1,511,787		2.47 %		261,984,431		1,436,630		2.18 %		218,365,002		693,221		1.26 %
Interest Bearing Deposits		756,201,939		7,829,198		4.11 %		724,660,638		6,796,570		3.76 %		672,042,353		4,871,007		2.94 %		638,382,839		3,685,412		2.29 %		574,218,895		1,735,027		1.20 %
Borrowings		$                                     40,480,346		$          359,191		3.52 %		$                                     45,865,355		$          350,096		3.06 %		$                                     49,125,142		$          379,866		3.14 %		$                                     46,940,688		$          101,216		0.86 %		$                                     53,279,949		$          229,283		1.72 %
Interest Bearing Liabilities		796,682,285		8,188,389		4.08 %		770,525,994		7,146,666		3.72 %		721,167,495		5,250,873		2.95 %		685,323,527		3,786,628		2.19 %		627,498,844		1,964,310		1.24 %
Non Interest Bearing Deposits		$                                   169,935,416						$                                   169,160,626						$                                   176,477,412						$                                   202,342,666						$                                   215,426,363
Cost of Funds						3.36 %						3.05 %						2.37 %						1.69 %						0.92 %
Net Interest Margin2				$       6,567,819		2.59 %				$       6,737,130		2.76 %				$       7,236,812		3.12 %				$       8,156,298		3.49 %				$       8,281,753		3.71 %
Shareholders Equity		$                                     77,445,100						$                                     77,557,760						$                                     76,928,018						$                                     73,185,633						$                                     77,295,762
2 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
	Three Months Ended						Three Months Ended								Nine Months Ended						Nine Months Ended
	September 30, 2023		Income /				September 30, 2022		Income /						September 30, 2023		Income /				September 30, 2022		Income /
	Average Balance		Expense		Yield		Average Balance		Expense		Yield				Average Balance		Expense		Yield		Average Balance		Expense		Yield
Assets
Cash	$             38,989,836		$      471,031		4.79 %		$             37,133,361		$      171,644		1.83 %				$             35,503,240		$   1,236,258		4.66 %		$             37,647,786		$      261,790		0.93 %
Investments (Tax Exempt)	20,763,539		197,591				21,615,440		186,314						21,047,798		567,800				22,375,856		561,761
Investments (Taxable)	208,005,473		2,574,314				179,086,818		1,479,134						196,676,203		6,970,254				171,038,679		3,606,666
Total Investments	228,769,012		2,771,905		4.81 %		200,702,258		1,665,448		3.29 %				217,724,001		7,538,054		4.63 %		193,414,535		4,168,427		2.88 %
Total Loans	736,781,506		11,513,273		6.20 %		648,964,205		8,408,971		5.14 %				722,319,320		32,353,378		5.99 %		624,640,709		22,710,581		4.86 %
Earning Assets	1,004,540,354		14,756,209		5.83 %		886,799,824		10,246,063		4.58 %				975,546,561		41,127,690		5.64 %		855,703,030		27,140,798		4.24 %
Assets	$        1,062,975,635						$           929,265,436								$        1,029,315,014						$           895,613,292
Liabilities
Interest Checking	$           213,956,322		$   2,130,491		3.95 %		$           132,342,702		$      458,605		1.37 %				$           188,805,623		$   5,342,886		3.78 %		$           125,858,701		$      641,578		0.68 %
Money Market	289,350,365		3,130,570		4.29 %		216,851,258		581,082		1.06 %				277,982,793		7,855,968		3.78 %		206,538,632		851,530		0.55 %
Savings	4,344,566		1,310		0.12 %		6,659,935		2,119		0.13 %				5,643,122		5,222		0.12 %		7,205,229		5,992		0.11 %
Time Deposits	248,550,686		2,566,827		4.10 %		218,365,002		693,221		1.26 %				245,511,716		6,292,700		3.43 %		192,997,346		1,328,113		0.92 %
Interest Bearing Deposits	756,201,939		7,829,197		4.11 %		574,218,897		1,735,027		1.20 %				717,943,254		19,496,776		3.63 %		532,599,908		2,827,213		0.71 %
Borrowings	$             40,480,346		359,191		3.52 %		$             53,279,949		229,283		1.72 %				$             45,125,282		$   1,089,153		3.23 %		$             60,289,005		725,176		1.61 %
Interest Bearing Liabilities	796,682,285		8,188,389		4.08 %		627,498,846		1,964,310		1.24 %				763,068,535		20,585,929		3.61 %		592,888,913		3,552,389		0.80 %
Non Interest Bearing Deposits	$           169,935,416						$           215,426,363								$           171,833,855						$           213,731,534
Cost of Funds					3.36 %						0.92 %								2.94 %						0.59 %
Net Interest Margin2			$   6,567,819		2.59 %				$   8,281,753		3.71 %						$ 20,541,760		2.82 %				$ 23,588,409		3.69 %
Shareholders Equity	$             77,445,100						$             77,295,762								$             77,312,187						$             79,593,533
ROAA	0.49 %						1.15 %								0.56 %						1.15 %
ROAE	6.75 %						13.81 %								7.48 %						12.94 %
2 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets

 

Selected Financial Data by Quarter Ended:
(Unaudited)
Balance Sheet Ratios	September 30, 2023	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022
Loans held-for-investment to Deposits	81.63 %	80.45 %	81.18 %	82.45 %	79.19 %
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	0.49 %	0.69 %	0.51 %	1.17 %	1.15 %
Return on Average Equity (ROAE)	6.75 %	9.15 %	6.52 %	15.51 %	13.81 %
Efficiency Ratio3	76.43 %	69.02 %	78.76 %	58.44 %	59.19 %
Net Interest Margin2	2.59 %	2.76 %	3.12 %	3.49 %	3.71 %
Yield on Average Earning Assets	5.83 %	5.68 %	5.38 %	5.11 %	4.58 %
Yield on Securities	4.81 %	4.71 %	4.34 %	4.11 %	3.29 %
Yield on Loans	6.20 %	6.00 %	5.75 %	5.47 %	5.14 %
Cost of Funds	3.36 %	3.05 %	2.37 %	1.69 %	0.92 %
Noninterest income to Total Revenue	11.12 %	14.24 %	11.57 %	11.81 %	12.11 %
Liquidity Ratios4
Uninsured Deposits to Total Deposits	28.10 %	25.78 %	21.77 %	27.05 %	30.57 %
Total Liquidity6 to Uninsured Deposits	120.27 %	120.82 %	149.16 %	127.88 %	119.04 %
Total Liquidity to Unfunded Commitments, CDs and Borrowings maturing in next 30 days	345.53 %	213.43 %	206.92 %	190.69 %	231.02 %
Tangible Common Equity Ratio	7.14 %	7.43 %	7.62 %	7.61 %	7.52 %
Tangible Common Equity Ratio (adjusted for unrealized losses on HTM securities)	6.83 %	7.16 %	7.38 %	7.36 %	7.23 %
Available -for-Sale securities (as % of total securities)	90.96 %	90.41 %	91.89 %	91.39 %	91.17 %
Per Share Data
Tangible Book Value	$10.36	$10.75	$10.71	$10.43	$9.96
Tangible Book Value (ex AOCI)1	$13.32	$13.29	$13.02	$12.87	$12.33
Share Price Data
Closing Price	$10.61	$10.56	$13.95	$14.57	$14.60
Book Value Multiple	102 %	98 %	130 %	140 %	147 %
Common Stock Data
Outstanding Shares at End of Period	7,292,677	7,296,845	7,214,466	7,256,328	7,281,606
Weighted Average shares outstanding, basic	7,277,022	7,307,802	7,280,803	7,238,807	7,271,784
Weighted Average shares outstanding, diluted	7,293,482	7,317,113	7,317,805	7,252,669	7,285,786
Capital Ratios (Bank Only)
Tier 1 Leverage ratio	10.64 %	10.99 %	11.30 %	11.32 %	11.59 %
Common Equity Tier 1 ratio	13.26 %	13.52 %	13.47 %	13.37 %	13.62 %
Tier 1 Risk Based Capital ratio	13.26 %	13.52 %	13.47 %	13.37 %	13.62 %
Total Risk Based Capital ratio	14.10 %	14.37 %	14.34 %	14.28 %	14.55 %
Credit Quality
Net Charge-offs to Average Loans	0.03 %	0.04 %	0.06 %	0.02 %	0.00 %
Total Non-performing Loans to loans held-for-investment	0.92 %	0.93 %	0.96 %	1.23 %	1.31 %
Total Non-performing Assets to Total Assets	0.66 %	0.65 %	0.67 %	0.88 %	0.90 %
Nonaccrual Loans to loans held-for-investment	0.92 %	0.93 %	0.96 %	1.23 %	1.31 %
Provision for Loan and Lease Losses	$205,000	$238,000	$543,000	$327,000	$382,000
Allowance for Loan and Lease Losses to net loans held-for-investment	0.95 %	0.98 %	1.01 %	1.09 %	1.12 %
Allowance for Loan and Lease Losses to net loans held-for-investment (ex PPP loans)	0.95 %	0.98 %	1.02 %	1.10 %	1.13 %
2 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets
6 Total Liquidity is the sum of cash, cash balances at banks, unencumbered available-for-sale securities and secured borrowing availability at the Federal Reserve and the Federal Home Loan Bank.

 

FREEDOM FINANCIAL HOLDINGS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES:
1 Tangible Book Value (ex-AOCI) (non-GAAP)				As of
				September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
Shareholder's Equity				$             75,573,033		$     77,399,123		$    77,256,026		$           74,946,131		$             72,490,029
Outstanding Shares at End of Period				7,292,677		7,197,834		7,214,466		7,184,259		7,281,606
Tangible Book Value (GAAP)				$                       10.36		$               10.75		$              10.71		$                     10.43		$                         9.96
Accumulated Other Comprehensive Income (Net) (AOCI)				$           (21,597,860)		$   (18,280,904)		$  (16,644,981)		$         (17,480,993)		$           (17,287,737)
AOCI per share equivalent				(2.96)		(2.54)		(2.31)		(2.43)		(2.37)
Tangible Book Value (ex-AOCI) (non-GAAP)				$                       13.32		$               13.29		$              13.02		$                     12.87		$                       12.32
2 Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2023 and 2022 periods.				Quarter Ending												Year Ending
				September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022				September 30, 2023		September 30, 2022
Income on Tax Exempt Securities				$                  156,097		$          148,314		$         144,151		$                146,021		$                  147,188				$                  448,562		$                  443,791
Tax Equivalent Adjustment				41,494		39,425		38,319		38,816		39,126				119,238		$                  117,970
Income on Tax Exempt Securities (Non-GAAP)				$                  197,591		$          187,739		$         182,470		$                184,837		$                  186,314				$                  567,800		$                  561,761
Average Earning Assets				$       1,004,540,354		$  980,854,780		$  940,541,289		$         927,515,881		$           886,799,824				$           975,546,561		$           855,703,030
Yield on Interest Earning Assets (GAAP)				5.81 %		5.66 %		5.37 %		5.09 %		4.57 %				5.62 %		4.22 %
Yield on Interest-Earning Assets (FTE) (Non-GAAP)				5.83 %		5.68 %		5.38 %		5.11 %		4.58 %				5.64 %		4.24 %
Net Interest Margin (NIM) (GAAP)				2.58 %		2.74 %		3.10 %		3.47 %		3.69 %				2.80 %		3.67 %
Net Interest Margin (NIM) (FTE) (Non-GAAP)				2.59 %		2.76 %		3.12 %		3.49 %		3.71 %				2.82 %		3.69 %
3 Efficiency Ratio (Non-GAAP)				Quarter Ending												Year Ending
				September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022				September 30, 2023		September 30, 2022
Net Interest Income				$               6,526,324		$       6,697,705		$      7,198,492		$             8,117,490		$               8,242,627				$             20,422,523		$             23,470,441
Non-Interest Income				816,250		1,112,000		941,701		1,087,106		1,136,242				2,869,950		4,611,832
Total Revenue				$               7,342,574		$       7,809,705		$      8,140,193		$             9,204,596		$               9,378,869				$             23,292,473		$             28,082,273
Non-Interest Expense				5,612,199		5,390,599		6,411,589		5,379,623		5,551,217				17,414,387		17,406,086
Efficiency Ratio (Non-GAAP)				76.43 %		69.02 %		78.76 %		58.44 %		59.19 %				74.76 %		61.98 %
4Liquidity Ratios (Non-GAAP)										Quarter Ending
				September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
Available-for-Sale Securities (as % of total securities)				90.96 %		90.41 %		91.89 %		91.39 %		91.17 %
Uninsured Deposits to Total Deposits				28.10 %		25.78 %		21.77 %		27.05 %		30.57 %
Total Liquidity to Uninsured Deposits				120.27 %		120.82 %		149.16 %		127.88 %		119.04 %
Total Liquidity to Unfunded Commitments, CDs and Borrowings maturing in next 30 days				345.53 %		213.43 %		206.92 %		190.69 %		231.02 %
Tangible Common Equity Ratio				7.14 %		7.43 %		7.62 %		7.61 %		7.52 %
Tangible Common Equity Ratio(adjusted for unrealized losses				6.83 %		7.16 %		7.38 %		7.36 %		7.23 %
on HTM Securities)
5 Total Revenue (Non-GAAP)				Quarter Ending												Year-to-Date
				September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022				September 30, 2023		September 30, 2022
Net Interest Income				$               6,526,324		$       6,697,705		$      7,198,492		$             8,117,490		$               8,242,627				$             20,422,523		$             23,470,441
Non-Interest Income				816,250		1,112,000		941,701		1,087,106		1,136,242				2,869,950		4,611,832
Total Revenue (non-GAAP)				$               7,342,574		$       7,809,705		$      8,140,193		$             9,204,596		$               9,378,869				$             23,292,473		$             28,082,273

 

Contact:
Joseph J. Thomas
President & Chief Executive Officer
703-667-4161: Phone
jthomas@freedom.bank: Email

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SOURCE Freedom Financial Holdings

FAQ

What was Freedom Financial Holdings' net income for the third quarter of 2023?

Freedom Financial Holdings reported net income of $1.3 million for the third quarter of 2023.

What factors contributed to the decrease in net interest margin?

The decrease in net interest margin was primarily due to higher deposit costs.

Did Freedom Financial Holdings experience any growth in loans and deposits?

Yes, Freedom Financial Holdings saw a 17.2% increase in loans and a 10.2% increase in deposits during the third quarter of 2023.

How did non-interest income change compared to the previous quarter?

Non-interest income decreased by 26.6% compared to the previous quarter.